Couche-Tard Continues Its Acquisition Trail
LAVAL, Quebec -- Having already generated plenty of headlines with its announcement that Chief Operating Officer Brian Hannasch will replace Alain Bouchard as president and CEO in September, Alimentation Couche-Tard had more news to share during its 2014 fiscal third-quarter earnings conference call today.
The parent company of Circle K convenience stores in the United States is on the hunt for new acquisitions. Bouchard noted he could not reveal much about these potential acquisitions, but did say that Couche-Tard is currently looking at multiple convenience store operations of varying sizes.
Regarding its most recent quarter ended Jan. 31, Couche-Tard acquired 36 U.S. stores. Twenty-three of these c-stores were purchased from Albuquerque Convenience and Retail LLC on Nov. 15, with 11 more acquired from Publix Super Markets Inc. on Oct. 24.
Fourteen new North American stores opened during Laval, Quebec-based Couche-Tard's latest quarter. As of Feb. 2, the company operated 6,234 c-stores and had an additional 15 stores under construction.
All new stores are considerably larger than what Couche-Tard built just five years ago, Bouchard noted. Now, new locations have a minimum of 3,600 square feet and are built as large as 4,500 square feet to accommodate foodservice operations, he added.
Couche-Tard's foodservice efforts are clearly paying off. The company's U.S. same-store foodservice sales grew 3.8 percent, higher than a 2.2-percent gain in Canada and a 0.9-percent increase in Europe.
"A tremendous pricing strategy and an excellent foodservice offer [really paid off in] the U.S.," stated Bouchard.
Merchandise and service gross margins stood at 32.7 percent in the U.S. during Couche-Tard's latest quarter.
Companywide, Couche-Tard earned a net profit of $182.3 million in its 2014 fiscal third quarter, a 28-percent improvement compared to the same quarter in the year-ago period. A strong foodservice offer was cited as the main reason for the earnings advancement.
The c-store retailer also announced a three-for-one stock split of its shares, which trade on the Toronto Stock Exchange. Hence, on April 14, shareholders will receive three shares for every one share owned, but each share of the company's stock will open trading at one-third the value of the prior day's price.
Management Change Follow-Up
Although today's conference call focused on earnings, the company was asked in a question-and-answer session about the previously announced management changes. Specifically, Couche-Tard was questioned regarding why the management change was announced now.
"Brian [Hannasch] is ready," responded Bouchard. "He is well respected by the company and the industry."
Bouchard added that he will be more focused on c-store acquisitions and store visits once he commences his new role as executive chairman of the board of directors following Couche-Tard's annual shareholder meeting on Sept. 24.